Will Qianhai Be Your Investment Destination? – Introduction to Qianhai

Since the announcements of establishing Qianhai Cooperation Zone, the word "Qianhai" has attracted the global attention for its outstanding policy incentives and remarkable advantages of strengthening the cooperation between the Chinese mainland and Hong Kong. In this article, we will introduce everything you want to know about Qianhai and see where your potential business opportunities may lay! 

Overview of Qianhai

Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone is located on the banks of Qianhai Bay in the west of Shenzhen City, Guangdong Province in China. Lying to the west of Shekou Bay and the east of Lingdingyang of the Pearl River, Qianhai was approved and established by the State Council on August 26, 2010. Taking advantage of the geographical advantages adjacent to Hong Kong, the plan specially formulates the "Overall Development Plan for Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone", positioning the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone as a pilot zone for Shenzhen-Hong Kong cooperation, a system and mechanism innovation zone, and a modern service zone, an industry agglomeration area, and structural adjustment leading area.

In September 2021, the State Council of the People's Republic of China issued the "Plan for Comprehensively Deepening the Reform and Opening-up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone". According to the "Plan", the total area of the cooperation zone will be expanded by 8 times, from 14.92 square kilometers to 120.56 square kilometers, including the airport modern service area, the west coast gateway hub, and a high-tech zone, which is conducive to the coordinated development of multiple industries. After the development, Qianhai is divided into three major areas. Guiwan is positioned as a financial center; Qianwan is positioned as a technology innovation center, and Mawan is positioned as a free trade city. The "Plan" proposes to support the further opening of the Qianhai Cooperation Zone to the Hong Kong and Macao service industries under the "Closer Economic Partnership Arrangement" (CEPA). It is emphasized that Qianhai is positioned as "a model of China's financial industry opening up to the outside world" and "a pilot zone for cross-border RMB business innovation".

Shenzhen is often seen as China's special economic zone, performing the role of the frontier of reform and opening-up, and Qianhai will then be known as the “special zone within the special economic zone”.

According to the planning of the Authority, Qianhai, the pilot zone for cooperation between the Chinese Mainland and Hong Kong, undertakes four major functions:

• Promoting innovation in the modern service industry;
• Integrating the modern service industry and accelerating the development of the modern service industry;
• Strengthening cooperation between the Chinese Mainland and Hong Kong;
• Supporting the industrial transformation and the development of sustainable economics in the Great Bay Area;
  
  

Why Setting Up a Company in Qianhai?

Which industry players can set up companies in Qianhai?

1. Modern Logistics Services: the preferential policies implemented in Qianhai will benefit companies engaging in supply chain management, logistics outsourcing services, modern logistics technology, logistics public service system development, third-party logistics settlement management, etc., which effectively support logistics players to provide services in the Chinese mainland and the world.
2. Information service industry: in the category, nine sub-projects, including value-added telecommunication business application system development, e-commerce, government technical support, information security technology R&D, new generation mobile communication network, and IPv6 technology R&D, etc. With the support of relevant policies, companies can promote the development of software and information technology service industry as well as the in-depth cooperation between the Chinese mainland and Hong Kong.
3. Technology service industry: Qianhai will focus on supporting the development of high-tech industries such as innovative materials, energy, life sciences, medicine, and environmental protection, which mainly include professional technology services for next-generation energy and new materials, gene sequencing and stem cells, etc. Participants in technologically advanced service industries related to life sciences, new energy batteries, three-dimensional display and printing technology, information technology, and business process outsourcing will truly enjoy the tax benefits of Qianhai’s policies.
4. Cultural and creative design industries services: companies participating in creative design services including visual communication design, industrial design and high-end arts and crafts design, cultural information resource development and creation services, network audio-visual program technology, animation and online gaming, new media technology, etc. Many policies and tax incentives in Qianhai will accelerate the development of cultural and creative design industries.
5. Business service industry: the services of management consulting, urban planning, and other professional skills services, legal services, accounting, taxation and asset evaluation, credit investigation and rating, credit services, international conference, and professional exhibition services, human resources and human capital services, intellectual property services and international cruise operations are included in this category. Qianhai will play a positive role in improving the overall service level and promoting the comprehensive development of the business service industry.
   
   

What are the beneficial policies of registering companies in Qianhai?

In order to enjoy the relevant policies of the Qianhai Cooperation Zone, your company needs to meet the following conditions, according to the Shenzhen Tax Service of the State Taxation Administration:

for enterprises registered in the Qianhai cooperation zone who are engaging in qualified industrial projects, their production and operation, personnel, accounting, property, etc. should be settled in the cooperation zone, and their substantive operation in the cooperation zone can be recognized. For enterprises that are only registered in the cooperation zone, but whose production, operation, personnel, accounting and property, etc. are not located in the cooperation zone, they will not be recognized for conducting substantive operations in the cooperation zone, and shall not enjoy the preferential corporate income tax policies of the cooperation zone. Let’s explain this in more detail:

1. Production and operation in the cooperation zone: the enterprise has a fixed production and operation site as well as necessary equipment or facilities in the cooperation zone for daily operation or its main production and operation site is in the cooperation zone, or the institution that implements substantial control of production and operation is in the cooperation zone, and conclude relevant contracts in the name of the enterprise registered in Qianhai zone.
2. Personnel in the cooperation zone: the enterprise has employees who meet the needs of production and operation and work in the cooperation zone, and their wages and salaries are paid through the bank accounts opened inside the cooperation zone; Depending on the scale of the company, at least 3 to 30 employees should have their social insurance such as basic endowment insurance registered for six months or more in the cooperation zone within one tax year. 
3. Accounting in the cooperation zone: the accounting documents such as corporate accounting vouchers, accounting books, and financial statements should be kept in the cooperation zone; basic deposit accounts and bank accounts for main business settlements are opened in the cooperation zone. 
4. Property in the cooperation zone: the property that the enterprise owns or has the right to use should be utilized in the cooperation zone, or the institution that implements substantial control of the property is inside the cooperation zone whose property needs to be closely relevant to the production of the enterprise.

If your company fulfilled the aforementioned requirements, according to the regulations leased by the Shenzhen Qianhai Administration, you will be qualified to enjoy the following benefits. 

• Enterprise income tax is levied at a reduced tax rate of 15% for qualified industrial projects;
• Overseas high-end talents and urgently-needed talents who are in line with Qianhai’s planned industrial direction will be temporarily subsidized by the Shenzhen Municipal Government following the Chinese mainland and overseas personal income tax burden with a maximum tax rate of 15%;

• A series of supportive measures will be given to enterprises and talents who jointly build the Qianhai Shenzhen-Hong Kong Intellectual Property Innovation Highland, such as intellectual property protection, intellectual property utilization, intellectual property transactions, etc.;
• Provide one-time incentives, rent subsidies, and personnel training reimbursement to enterprises who support the development of the headquarter enterprises of Shenzhen-Hong Kong cooperation;
• For innovative research and development institutions, technological innovation platforms, and technological innovation projects that support scientific and technological innovation companies, financial subsidies, site support, and introduction of talents will be provided;
• For enterprises and projects that promote the high-quality development of the commercial logistics industry, financial subsidies, site support, introduction of talents and other supports will be provided;
• Provide financial subsidies, venue support, introduction of talents, and other support to enterprises as well as the talents who support the gathering of the legal service industry in Qianhai Shenzhen-Hong Kong International Legal Zone;
• To support institutions and projects that contribute to the development of new think tanks with Chinese characteristics, financial subsidies, site support, the introduction of talents and other support will be provided;
• For institutions and projects that support the joint development of Qianhai Shenzhen-Hong Kong venture capital, financial subsidies, site support, introduction of talents and other supports will be provided.

The above information is for reference only and may change as the policy changes. If you have other questions about the incentive policies in Qianhai, you are welcome to make an appointment with Hongda for a free conference call to continue consulting.

Qianhai Cooperation Zone and Hong Kong: Could this be your next business opportunity?

Qianhai will play an important role in the history of cooperation between Shenzhen and Hong Kong. The cooperation between the two cities will be the biggest highlight of Qianhai's planning and future industrial development. Directly named "Shenzhen-Hong Kong Modern Service Industry Cooperation Zone", the main theme of Qianhai will focus on Shenzhen-Hong Kong cooperation without any doubt.

Through the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Hong Kong, which is limited by its space, can be extended to the Chinese mainland. The Qianhai Cooperation Zone is moving closer to Hong Kong in terms of the business environment and various policy systems, facilitating a better development of Hong Kong enterprises in the Chinese mainland. The cooperation between Shenzhen and Hong Kong has further enhanced and developed the core competitiveness of both parties and by stepping onto the stage of the Qianhai Cooperation Zone, the performance can further radiate the whole of Guangdong and even the whole country.

Specifically, the development of the Qianhai Cooperation Zone promotes close cooperation with Hong Kong and draws on Hong Kong’s experience as an international financial center and business center (including successful experience in the rule of law and marketization), and can further benefit from introducing institutional innovation and explore services that are conducive to modern services. 

1. Judicial system: For the innovation of the judicial system, the most important achievement is the "Hong Kong law for Hong Kong-owned companies" For Hong Kong, Macao, Taiwan, and foreign-funded enterprises registered in the Qianhai Cooperation Zone sign civil and commercial contracts, they can agree with the other party to choose the laws to be applied in the contracts, including the Hong Kong laws and regulations.
2. Trade and investment facilitation: the Qianhai Cooperation Zone introduced new electronic tax declaration and payment methods, and implemented the "Shenzhen-Hong Kong Land-Air Joint Transport". Since 2017, the inspection procedures have been simplified for goods intended to be exported via Hong Kong Airport. Enterprises can complete the entire business process of export cargo booking, palletizing, and security inspection in the Qianhai Comprehensive Bonded Zone and board their goods on the plane after arriving at Hong Kong Airport.
3. Financial reform: two important positions were given to the Qianhai Cooperation Zone in terms of financial services, the "Cross-border RMB business innovation pilot zone" and "National Financial Industry Opening-up Pilot Demonstration Window". In this regard, Qianhai has implemented open trials of financial services, including the policy of allowing locally registered companies to conduct cross-border transactions such as cross-border RMB loans, cross-border two-way capital pools, and cross-border two-way bond issuance.

Conclusion:

As one of the seven major projects of China's important cooperation between Guangdong, Hong Kong, and Macao, the Qianhai Cooperation Zone will play an important role in China’s economic growth and the development of the modern service industry, bringing outstanding business opportunities. Opening a Chinese mainland company in the Qianhai Cooperation Zone will bring many advantages to your business development in the region, and you can also set up a wholly foreign-owned company in our Qianhai Cooperation Zone Complete Guide Blog to download the free checklist. Of course, you can also open a company in Hong Kong to enjoy the relevant policies and benefits of Hong Kong-funded enterprises in the Qianhai Cooperation Zone. If you are a Hong Kong or Chinese mainland young talent who wants to start a business in the Qianhai Cooperation Zone, you can click Exploring the Qianhai Shenzhen-Hong Kong Youth DreamWorks & its benefits blog to learn how the Qianhai Cooperation Zone can help you realize your entrepreneurial dreams.

You are welcome to make an appointment with Hongda for a free consultation meeting, learn more about the Qianhai Cooperation Zone’s preferential policies, and discuss your investment plan together.